According to research and analytics firm Ovum, the telecommunications industry will lose a combined $386 billion between 2012 and 2018 due to more and more consumers using OTT (over-the top) voice applications. This has led to a number of global telecommunications companies being forced to rethink their revenue streams.
In another knock to telecoms companies’ bottom lines, seven cities in Colorado, USA last week voted to allow their local governments to create municipal broadband networks. The news has increased the long-standing debate about ‘Government Owned Networks’ (GONs) and what their effect on the broadband market might be.
Commercial broadband providers are against government involvement in the broadband market with AT&T in the USA claiming: “GONs should not be utilised where the private sector is already providing broadband or can be expected to do so in a reasonable timeframe. Although many GONs have failed, or at least failed to live up to expectations, GONs can nonetheless discourage private sector investment because of understandable concerns by private sector entities of a non-level playing field. And any policy that risks diminishing private sector investment would be short-sighted and unwise.”
The counter argument from consumers and those that are pro-GON is that commercial broadband providers are not doing enough to ensure that everyone has access to high speed internet and that there are still large areas with no coverage or sub-standard coverage. Far from negatively impacting competition, the pro-GON movement cite the case of Chattanooga, Tennessee where ISPs serving the area actually started aggressively upgrading their networks once the city launched its own fiber service, leading to greater choice and better services for Chattanooga’s inhabitants.
Whatever side of the fence you are on, the news from Colorado and an increase in the number of government owned networks will effect broadband providers and the wider telecoms community. Companies will no doubt start looking to become more competitive, provide better service and find new revenues streams to make up for any income that may be lost to newly formed, government backed networks.
Source: Vine 15